Final Results

RNS Number : 6380Z

Advanced Oncotherapy PLC

31 May 2016

 

31 May 2016

ADVANCED ONCOTHERAPY PLC

("Advanced Oncotherapy" or the "Company")

Final Results for the year ended 31 December 2015

Advanced Oncotherapy (AIM: AVO), the developer of next generation proton therapy systems for cancer treatment, announces audited results for the year ended 31 December 2015, a year of good progress in the development of the Company's LIGHT system.

Highlights:

·     Oversubscribed placing to raise £20 million (net) to develop and install first LIGHT system

·     Sale of two LIGHT systems in China and four additional framework agreements signed

·     Harley Street lease agreement for the UK's first proton therapy centre using the LIGHT System

·     Operator agreement with CircleHealth for the Harley Street site

·     Progress in the technical developments apace with the original timetable

·     Cash and cash equivalents of £9.0 million at 31 December 2015

·     Loss from continuing operations per ordinary share of 0.46p (2014: loss of 0.67p)

Post Period End Events & Key Milestones

·     Industrialisation agreement with Thales

·     Continued team expansion through senior management appointments

·     £24m financing secured for the provision of vendor financing for the Harley Street project

Michael Sinclair, CEO of Advanced Oncotherapy, said: "2015 has been a year of significant progress for the Company. We have delivered on all of the milestones that were promised throughout the year within the timeframe set out in 2014 and continue to work towards delivering a cost effective proton therapy unit. We have realigned our management team to reflect the changes in responsibility as the business has shifted from working on the development of the first LIGHT system to the ongoing commercial roll-out of the technology. We are well positioned to have the first operational proton beam therapy centre in London and look forward to creating more commercial deals and agreements to further enhance our position."

Advanced Oncotherapy Plc	www.avoplc.com
Michael Sinclair, CEO	Tel: [phone]
Nicolas Serandour, CFO & COO
Stockdale Securities (Nomad & Joint Broker)
Antonio Bossi / David Coaten	Tel: [phone]
Beaufort Securities (Joint Broker)
Jon Belliss / Elliot Hance	Tel: [phone]
Walbrook PR (Financial PR & IR)	Tel: [phone] or [e-mail]
Paul McManus / Anna Dunphy	Mob: [phone] / Mob: [phone]

About Advanced Oncotherapy Plc www.avoplc.com

Advanced Oncotherapy is a provider of particle therapy with protons that harnesses the best in modern technology. Advanced Oncotherapy's team "ADAM" based in Geneva focuses on the development of a proprietary proton accelerator called Linac Image Guided Hadron Technology (LIGHT). LIGHT accelerates protons to the energy levels achieved in legacy machines but in a unit that is a quarter of the size and between a quarter and a fifth of the cost. This compact configuration delivers proton beams in a way that facilitates a greater precision and electronic control which is not achievable with older technologies.

As a result, Advanced Oncotherapy will offer healthcare providers affordable systems that will enable them to treat cancer with an innovative technology as well as better health outcomes and lower treatment related side effects.

Advanced Oncotherapy continually monitors the market for any emerging improvements in delivering proton therapy and actively seeks working relationships with providers of these innovative technologies. Through these relationships, the Company will remain the prime provider of an innovative and cost-effective system for particle therapy with protons.

 

EXECUTIVE CHAIRMAN'S STATEMENT

INTRODUCTION

2015 has been another year of significant progress in our aim of delivering the ground-breaking LIGHT (Linac for Image Guided Hadron Therapy) system, a next generation proton therapy system for treating cancer. During 2015 we have delivered on all of the milestones that we have set out in our various shareholder communications. In the high technology environment in which we work, it is sometimes difficult to understand the complexities of our operations so we - as a management team - have taken the decision to provide as much technical knowledge as possible in our shareholder communications.  Ultimately however, we remain a company dedicated to providing cancer patients with more effective and affordable therapy and by implication generating superior returns for our shareholders.

With that in mind, our strategy is to disrupt the business model associated with traditional proton radiotherapy equipment through delivering a cost effective proton therapy unit which can be installed in cancer treatment centres of excellence in conurbations worldwide, based on the LIBO (LInac BOoster) technology that has been developed at CERN.

OVERVIEW OF PROGRESS

During the year we have been successful in a number of key areas. Principal among these have been:

·     progression on the development and testing of LIGHT elements; 

·     first sales and pipeline of commercial opportunities; and

·     completion of significant financing round.

PROGRESSION ON THE DEVELOPMENT AND TESTING OF LIGHT ELEMENTS

Progress in the technical development of our first LIGHT systems has continued apace with the delivery of a number of components to the team at our facility in Geneva.

In January 2015, we were able to confirm that the first high-speed accelerator or Coupled Cavity Linac accelerating module ("CCL") was completed and delivered to our Geneva facility. Ten CCL modules are required by the LIGHT system to accelerate the protons to the energies needed to treat all radiosensitive tumours found in a typical clinical setting. In May 2015, this first unit successfully completed its first Radio Frequency Power testing. The second CCL was delivered to our testing facility in July 2015, alongside the Modulator and Klystron power units ready for high power testing. This commenced in August 2015 and was completed at full power in November 2015.

In May 2015 the first RF Power units, manufactured by ScandiNova Systems AB, were delivered to our facility for testing. RF power units generate the high-power needed to accelerate protons to energies whereby they can effectively target cancer cells. The LIGHT machine requires 12 RF Power units in total and we are now going through the process of testing multiple units together at full operational power.

In early July 2015 we were able to initiate our first tests on the Side Coupled Drift Tube Linac ("SCDTL") module. The SCDTLs sit between the Radio Frequency Quadrupole ("RFQ"), which first accelerates the protons to 5MeV, and the CCLs. When combined, the four SCDTL modules will accelerate protons from 5MeV to 37.5MeV. We have been pleased with the results achieved so far.

The support of our suppliers who have delivered to schedule or even ahead of schedule has been key, and has enabled us to complete this phase of the testing both successfully and on time.

FIRST SALE AND PIPELINE OF COMMERCIAL OPPORTUNITIES

The advantages of proton therapy over conventional radiation therapy have been increasingly demonstrated over the years in a number of target cancers which are difficult to reach or closely associated with sensitive structures such as the brain and spinal cord.  The unique way in which the proton beam travels through tissue means that only a small amount of energy is delivered along the path to the cancer and that most of the dose is delivered precisely in the cancerous tissue being targeted. As a result, proton therapy overcomes one of the major limitations associated with conventional radiotherapy, that of irradiating healthy tissue leading to unwanted side effects, such as secondary tumours.

However, proton technology to date has been very expensive to install requiring a very significant footprint for the equipment that generates the proton beam and the treatment rooms required.  As a result, there are only 54 facilities in the world providing proton therapy treatment at present. These facilities cost up to $200 million, and each clinical treatment radiotherapy course costing up to $100,000.

We believe that our ground-breaking LIGHT system will significantly change the current market dynamic for proton therapy, enabling more machines to be installed, more patients to be treated, and ultimately creating significant value for our shareholders as LIGHT becomes 'best practice' for proton therapy.

During 2015, we made a number of significant announcements regarding the building and installation of our first LIGHT system and further commercial sales.  One of the most important was our agreement in January 2015 with Howard de Walden Estates to lease 141 and 143 Harley Street, London. Harley Street is the most prestigious medical address in the UK and recognised globally as a centre for medical excellence. The properties comprise approximately 11,800 sq ft, which is sufficient to house the LIGHT system and treatment rooms as well as other services required for a fully functional clinic. This will become the UK's first Proton Therapy Centre using the LIGHT system. The total cost of the redevelopment will be borne by our partner, Howard de Walden Estates and is estimated at £7 million, which is considerably less expensive than the building costs associated with the comparable units being considered by the UK NHS.

In October 2015 we signed a joint venture agreement with Circle Health to operate the Company's proton beam cancer therapy centre in Harley Street. Discussions are also ongoing surrounding an agreement to supply a LIGHT system alongside Circle Health's planned new-build hospital in Birmingham. Circle Health has around 2,000 partners. It runs private hospitals in Bath and Reading, an NHS Treatment Centre in Nottingham, and an NHS whole-population contract for musculoskeletal care in Bedfordshire. The company is part-owned by its staff. Circle Health will take responsibility for all operational and clinical matters at the facility as well as the additional procurement, fit-out and facility testing requirements needed for full commissioning and beyond the testing required during the technical development of the system. Circle Health will also take responsibility for insurance provision for the centre.

During the year we were also able to announce two further commercial sales of the LIGHT proton therapy system in China through our partnership with Sinophi Healthcare Limited ("Sinophi"). Sinophi is a UK company investing in and managing public general and specialty hospitals in China, providing them with the best and most affordable technology to improve patient outcomes.

In October 2015, we received a $75/80 million purchase order from the China-Japan Union Hospital of Jilin University, through our partnership with Sinophi. The China-Japan Union Hospital is one of the largest hospitals in North-East China with over 3,300 beds and is located in Changchun, Jilin Province. The purchase order relates to a single LIGHT system to be installed at the heart of a five treatment room facility.

This is the second commercial sale of the Company's next-generation proton therapy system in China and follows the announcement in March 2015 that the Company's LIGHT system will be installed as part of Sinophi's oncology hospital project in Huai'an City, in Jiangsu province, East China.

COMPLETION OF SIGNIFICANT FINANCING ROUND

The Company is well resourced following an oversubscribed £21 million equity funding in May 2015.  The money raised has funded the manufacture and testing of the various components that make up the LIGHT system which is being assembled at the ADAM facility in Geneva. The funding also supports our first commercial site in the UK at 141-143 Harley Street London. This site is being developed in conjunction with the owners, Howard de Walden Estates, and Circle Health who will run the facility once it is completed. The balance is being allocated to general working capital.

In May 2016, we also secured a £24 million Vendor financing agreement with Metric Capital, a pan-European private capital fund manager. This means that the purchase cost of the LIGHT machine and funding for the operations related to our Harley Street project are all in place. Vendor financing has become standard practice in the Proton Therapy Sector and this forms an essential part of our financial strategy, giving us greater confidence to secure new purchase orders and enhancing our returns.

During the year there was an additional cash benefit to the Company from the sale of our property in Southampton for £290,000 which has been available for further development.

In addition, Oncotherapy Resources Ltd, our subsidiary focused on distributing an innovative brachytherapy device, was disposed of for a total of £100,000 of which £75,000 was received in the period.

Progress continues on the sale of our property in Folkestone, the proceeds of which will be used to partially offset against the loan on the property.

PEOPLE

We made a number of senior management changes and appointments during the year. These were all focused on creating a commercially focussed business. In November 2015, we appointed Professor Steve Myers OBE, former Director of Accelerators and Technology at CERN, as Executive Chairman of Advanced Oncotherapy's fully owned subsidiary ADAM. He is internationally recognised for his engineering contributions and leadership in the development of CERN's particle colliders over the past 40 years, including the Intersecting Storage Ring Accelerator, the Large Electron-Positron collider and the Large Hadron Collider.

In February 2016, we decided to realign the roles and responsibilities of the Executive team to add additional focus to both operational functions and ongoing sales and business development. For this reason, I became the Chief Executive Officer and Executive Chairman; Sanjeev Pandya, former Chief Executive Officer, became Executive Vice President for Global Business Development. Nicolas Serandour, the Chief Financial Officer, became Chief Operating and Financial Officer. These changes were important and followed the agreement with Thales S.A. ("Thales") which marked a shift in the business from just focussing on the development of the first LIGHT system, to the ongoing commercial roll-out of the game-changing technology. The future commercial development of the business will be critical to the long-term success and value creation within the Company.

In March 2016 we also announced that Michel Baelen, who was previously Health Policy Compliance Director and Head of Regulatory Affairs and Quality Assurance of the proton therapy-based company IBA for over 19 years, and Dr. Gerardo d'Auria, who has more than 30 years of experience working with RF systems and linear accelerators, had joined the Company as Head of Regulatory Affairs and Technical Director.

Investing in our people is the most important investment we make in the future of our business. The development, motivation and well-being of staff is vital to the success of Advanced Oncotherapy, and their dedication, professionalism, knowledge and enthusiasm is always of the highest standard. On behalf of all our stakeholders, we would like to thank all our employees for their hard work and their contribution to the Company's success during a year in which Advanced Oncotherapy once again demonstrated its ability to meet its objectives whilst constantly striving for innovation. We look forward to their continued support as we enter what promises to be a transformational period for the Company.

SHARE CONSOLIDATION

The Company currently has 1,418,342,375 ordinary shares in issue and we will be seeking approval from shareholders at the upcoming Annual General Meeting to reduce this number through a consolidation of every 25 existing ordinary shares into one new consolidated ordinary share. We believe this will lead to the Company having a more readily understood share price and number of shares in issue.  Further details of this are set out in the Directors Report included in the Annual Report and notice of Annual General Meeting.

OUTLOOK FOR 2016

The strong momentum we have seen in 2015 has continued into 2016. We have had a strong start to 2016. In February we announced that we had entered into an industrialisation agreement with Thales, for our proprietary LIGHT system and secured vendor financing for our Harley Street project.

As 2016 develops and we build on the significant progress that we made in 2015, our priorities are to continue the testing and integration of the components of the LIGHT machine to ensure compliance with the associated regulatory requirements resulting in the initial successful installation into the UK. In addition, we will pursue the commercial roll-out of the technology through our existing partners and forge relationships in new territories to further expand our reach.

We would like to thank all of our stakeholders for their continued support this year and we look forward to a new year of growth and development.

 

Consolidated statement of comprehensive income	Group	Group
For the year ended 31 December 2015 - Financials in £	2015	2014
Revenue	-	-
Cost of sales	-	-
Gross profit	-	-
Administrative expenses	(7,617,944)	(5,036,775)
Impairment charge for investment properties	(887,094)	(802,907)
Operating loss	(8,505,038)	(5,839,682)
Finance income	26,805	499,281
Finance costs	(151,154)	(359,457)
Loss on ordinary activities before taxation	(8,629,386)	(5,699,858)
Taxation	2,784,231	-
Loss after taxation from continuing operations	(5,845,155)	(5,699,858)
Loss for the year from discontinued operations	(710,336)	(1,862,927)
Loss after discontinued operations	(6,555,491)	(7,562,785)
Loss for the period:
Equity of shareholders of the parent company	(6,555,491)	(7,463,320)
Non-controlling interests	-	(99,465)
	(6,555,491)	(7,562,785)
Exchange differences on translation of foreign operations	286,125	-
Total comprehensive loss for the year net of tax	(6,269,366)	(7,562,785)
Total comprehensive loss attributable to:
Equity of shareholders of the parent company	(6,269,366)	(7,463,320)
Non-controlling interests	-	(99,465)
	(6,269,366)	(7,562,785)
Loss per ordinary share
Basic and diluted
Continuing operations	(0.46)p	(0.67)p
Discontinued operations	(0.06)p	(0.22)p
	(0.51)p	(0.89)p
Weighted average number of shares (000's)	1,278,988	848,376

Consolidated statement of financial position		Group	Group
As at 31 December 2015 - Financials in £		2015	2014
Non-current assets
Investment property		310,000	1,197,094
Investments		-	-
Intangible assets		12,743,951	9,217,854
Plant and equipment		1,002,409	882,128
		14,056,360	11,297,076
Current Assets
Trade and other receivables		521,733	591,686
Corporation tax R&D refund		2,784,231	-
Cash and cash equivalents		8,958,135	1,465,149
Inventories		4,418,289	1,112,050
		16,682,388	3,168,885
Total assets		30,738,748	14,465,961
Current liabilities
Trade and other payables		(2,458,855)	(2,346,263)
Borrowings		(1,000,000)	(987,832)
		(3,458,855)	(3,334,095)
Non-current liabilities
Borrowings		-	-
Deferred tax		-	-
		-	-
Total liabilities		(3,458,855)	(3,334,095)
Net assets		27,279,893	11,131,866
Equity
Share capital		14,183,284	10,284,439
Share premium reserve		32,815,156	14,658,924
Share option reserve		3,045,779	2,020,681
Reverse acquisition reserve		11,038,204	11,038,204
Acquisition reserve		-	662,782
Exchange movements reserve		(83,166)	(369,291)
Accumulated losses		(33,719,363)	(27,163,872)
Equity attributable to shareholders of the Parent Company		27,279,893	11,131,866
Non-controlling interests		-	-
Total equity funds		27,279,893	11,131,866

Consolidated statement of changes in equity

For the year ended 31 December 2015 - Financials in £

												Equity
			Share	Reverse			Exchange					share-		Non-
	Share	Share	options	acquisition		Acquisition	movement			Accumulated		holders		controlling
	capital	premium	reserve		reserve	reserve		reserve		losses	interest		interest		Total
Balance at 01 January 2014	6,044,415	6,874,185	1,478,091		11,038,204	1,462,782		(388,330)		(19,601,087)	6,908,260		-		6,908,260
Loss for the year	-	-	-		-	-		19,039		(7,463,320)	(7,444,281)		(99,465)		(7,543,746)
Total comprehensive
income	-	-	-	-		-			19,039	(7,463,320)		(7,444,281)		(99,465)	(7,543,746)
Arising on issues of ordinary shares	4,240,024	7,784,739	-	-		(800,000)			-	-		11,224,762		-	11,224,762
Share based payment:
- cost of raising finance	-	-	30,598	-		-			-	-		30,598		-	30,598
- employee services	-	-	468,696	-		-			-	-		468,696		-	468,696
- other services	-	-	43,296	-		-			-	-		43,296		-	43,296
- acquisition of ADAM	-	-	-	-		-			-	-		-		-	-
Group provision for minority interest	-	-	-	-		-			-	(99,465)		(99,465)		99,465	-
Balance at 31 December 2014	10,284,439	14,658,924	2,020,681	11,038,204		662,782			(369,291)	(27,163,872)		11,131,866		-	11,131,866
Balance at 01 January 2015	10,284,439	14,658,924	2,020,681	11,038,204		662,782			(369,291)	(27,163,872)		11,131,866		-	11,131,866
Loss for the year	-	-	-	-		-			286,125	(6,555,491)		(6,269,366)		-	(6,269,366)
Total comprehensive income	-	-	-	-		-			286,125	(6,555,491)		(6,269,366)		-	(6,269,366)
Arising on issues of ordinary shares	3,898,845	18,156,232	-	-		(662,782)			-	-		21,392,295		-	21,392,295
Share based payment:
- cost of raising finance	-	-	62,285	-		-			-	-		62,285		-	62,285
- employee services	-	-	816,967	-		-			-	-		816,967		-	816,967
- acquisition of ADAM	-	-	119,142	-		-			-	-		119,142		-	119,142
- other services	-	-	26,704	-		-			-	-		26,704		-	26,704
Group provision for minority interest	-	-	-	-		-			-	-		-		-	-
Balance at 31 December 2015	14,183,283	32,815,156	3,045,779	11,038,204		-			(83,166)	(33,719,363)		27,279,893		-	27,279,893

Consolidated statement of cash flows

For the year ended 31 December 2015 - Financials in £

	2015				2014
	Cont'd	Discont'd	Group		Cont'd	Discont'd	Group
Cash flow from operating activities
Loss after taxation	(5,845,155)	(710,336)	(6,555,491)		(5,699,858)	(1,862,927)	(7,562,785)
Adjustments:
Taxation	(2,784,231)	-	(2,784,231)		-	-	-
Finance costs	151,154	(17,500)	133,654		359,457	17,723	377,180
Finance income	(26,805)	-	(26,805)		8	-	8
Depreciation	33,754	145,881	179,635		6,123	111,493	117,616
Impairment charge for investment properties	887,094	-	887,094		802,907	-	802,907
Loss on disposal of subsidiary	-	367,080	367,080		-	-	-
Waiver of mortgage debt	-	-	-		(499,281)	-	(499,281)
Share based payments	1,025,098	-	1,025,098		542,590	-	542,590
Cash flows from operations before changes in working capital	(6,559,092)	(214,875)	(6,773,967)		(4,488,054)	(1,733,711)	(6,221,765)
Changes in inventories	(3,136,739)	30,500	(3,106,239)		(1,074,851)	-	(1,074,851)
Change in trade and other receivables	(2,841,376)	100,891	(2,740,485)		604,828	-	604,828
Change in trade and other payables	220,345	(80,225)	140,120		311,725	-	311,725
Cash (used) / generated from operations	(12,316,862)	(163,709)	(12,480,571)		(4,646,352)	(1,733,711)	(6,380,063)
Interest paid	(148,388)	-	(148,388)		(178,278)	-	(178,278)
Corporation Tax Receipt	2,784,231	-	2,784,231		-	-	-
Cash flows from operating activities	(9,681,019)	(163,709)	(9,844,728)		(4,824,630)	(1,733,711)	(6,558,341)
Cash flows from investing activities:
Cash consideration received on disposal of subsidiary undertaking	-	101,207	101,207		6,020	-	6,020
Disposal of plant and equipment	-	462,412	462,412		-	-	-
Cash disposed with subsidiary	-	(92)	(92)		-	-	-
Capital exp. on intangible assets	(3,526,097)	-	(3,526,097)		(984,540)	-	(984,540)
Purchase of plant and equipment	(762,329)	-	(762,329)		(265,922)	(60,9558)	(326,880)
Interest received	-	-	-		-	-	-
Cash flows from investment activities	(4,288,426)	563,527	(3,724,899)		(1,244,442)	(60,958)	(1,305,400)
Cash flows from financing activities:
Equity share capital raised	21,062,614	-	21,062,614		10,158,129	-	10,158,129
Other short term loans	-	-	-		(978,042)	-	(978,042)
Intra Group Cash Transfers	400,874	(400,874)	-		(1,790,152)	1,790,152	-
Cash flows from financing activities	21,463,488	(400,874)	21,062,614		7,389,935	1,790,152	9,180,087
Decrease in cash/cash equivalents	7,494,042	(1,056)	7,492,987		1,320,863	(4,517)	1,316,346
Cash/cash equivalents at  01-Jan-15	1,464,093	1,056	1,465,149		143,230	5,573	148,803
Cash/cash equivalents at 31-Dec-15	8,958,135	-	8,958,135		1,464,093	1,056	1,465,149

The annual report for the year ended 31 December 2015 is available from the Company's website at www.advancedoncotherapy.com and will shortly be posted to shareholders together with a notice of Annual General Meeting to be held at Royal Institute of British Architects, 66 Portland Place, London W1B 1AD on Thursday, 30 June 2016.

 

END

 

 

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